N°25-68: Natural Disasters and the Real Effect of Skilled Labor Mobility

This study investigates the effects of skilled labor mobility as a response to climate disasters. Based on a novel measure of firm-level skilled labor mobility, we identify that skilled labor mobility exposed to climate disasters leads to increased liquidity buffers whereas routine-task labor does not. Additionally, firms with skilled labor mobility exposed to frequent climate disasters experience a decrease in sales growth and market shares, while firms with more routine-task labor remain unaffected. Furthermore, state-level climate adaptation policies can mitigate the adverse effects of climate disasters. Overall, the findings suggest that skilled labor mobility increases the cost of labor adjustment induced by climate change, but adaptation actions promote resilience to the challenges caused by labor market frictions.